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Date: June 22, 2017

U.S. Supreme Court Further Limits Jurisdiction Over Actions Filed by Out-Of-State Plaintiffs Against Out-Of-State Defendants Margaret Johnson is Of Counsel in Foley & Mansfield’s Los Angeles office. She focuses her practice in Toxic Tort / Mass Tort and Product Liability.

by foleyandmansfield
Date: June 22, 2017
by foleyandmansfield

U.S. Supreme Court Further Limits Jurisdiction Over Actions Filed by Out-Of-State Plaintiffs Against Out-Of-State Defendants Margaret Johnson is Of Counsel in Foley & Mansfield’s Los Angeles office. She focuses her practice in Toxic Tort / Mass Tort and Product Liability.

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by Margaret Johnson


On June 19, 2017, the United States Supreme Court issued the third, and most important, of its corporate jurisdiction cases this term — Bristol-Myers Squibb v. Superior Court of California, 2017 WL 2621322. 

In Bristol-Myers, several hundred plaintiffs (including 86 California residents) from 33 states filed suit against Bristol-Myers for injuries related to its drug, Plavix.  A few years ago in Daimler AG v. Bauman, 571 U.S. ___, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014) the Supreme Court limited general jurisdiction, for the most part, to a corporation’s state of incorporation or principal place of business.  Neither applied to Bristol-Myers.  However, the California Supreme Court held that Bristol-Myers’ “wide ranging” contacts with the state (which included research, marketing and sales but not design or development) were sufficient to support the exercise of specific jurisdiction over the drug company.

The United States Supreme Court rejected the California court’s “sliding scale approach”, because it “resembles a loose and spurious form of general jurisdiction” and is “difficult to square with [the United States Supreme Court’s] precedents”:    

[The California Supreme Court] found specific jurisdiction without identifying any adequate link between the State and the nonresidents’ claims.  The nonresidents were not prescribed Plavix in California, did not purchase Plavix in California, did not ingest Plavix in California, and were not injured by Plavix in California.  The mere fact that other plaintiffs were prescribed, obtained, and ingested Plavix in California – and allegedly sustained the same injuries as did the non-residents – does not allow the State to assert specific jurisdiction over the nonresidents’ claims.  Nor is it sufficient (or relevant) that BMS conducted research in California on matters unrelated to Plavix.  What is needed is a connection between the forum and the specific claims at issue.

Accordingly, the near unanimous (8-1) Supreme Court held that allowing the non-residents’ claims would violate due process because the California courts lack specific jurisdiction over Bristol-Myers.  In so holding, the Supreme Court stated that its decision “will not result in the parade of horrible that [plaintiffs] conjure up.”  As the Court noted (and Bristol-Myers conceded), the non-residents could still file suit in other states with general jurisdiction over Bristol-Myers.

The two previous jurisdiction cases decided in this term are TC Heartland v. Kraft Foods Group Brands, 2017 WL 2216934 (U.S. May 22, 2017) and BNSF Railway Company v. Tyrrell, 2017 WL 2322834 (U.S. May 30, 2017).

In TC Heartland, the United States Supreme Court limited the venue in which patent infringement cases may be brought.  The Supreme Court held that the patent venue statute (28 U.S.C. §1400(b)) is not supplemented by the general venue statute (28 U.S.C. §1391).  Under the patent venue statute, “[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.”  28 U.S.C. §1400(b).  The Supreme Court held that a “domestic corporation ‘resides’ only in its State of incorporation for purposes of this patent venue statute”, thereby limiting where patent infringement cases may be brought to:  (1) the state in which the defendant was incorporated, or (2) where the defendant committed the acts of infringement and has a regular and established place of business.

In Tyrrell, the United States Supreme Court held that the Federal Employers’ Liability Act (FELA), 45 U.S.C. §51, et seq., does not confer general jurisdiction over claims arising out-of-state.  More specifically, BNSF was not subject to jurisdiction in Montana for claims arising out of its out-of-state activities because it was not incorporated in Montana, nor were its headquarters located in that state.  Although BNSF’s presence and activities within the state are sufficient to support personal jurisdiction on related claims, the claims at issue were brought by non-resident employees for injuries suffered out-of-state.  Accordingly, the Supreme Court held that the exercise of general jurisdiction over BNSF violated the Due Process Clause of the Fourteenth Amendment. 

This trilogy of jurisdiction cases should serve to limit forum shopping in actions against corporate defendants.  

 

Refer to the opinions here –

BNSF Railway Company v. Tyrrell

TC Heartland v. Kraft Foods Group Brands

Bristol-Meyers Opinion

 

Margaret Johnson, Of Counsel, Foley & Mansfield

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